Dáil Éireann Debate, Wednesday - 22 January 2014
20. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform his estimate of the State’s actuarial liability in respect of future public service pension obligations; his views on whether adequate planning and provision is being made for the future payment of public service pension; his plans regarding same; and if he will make a statement on the matter. [2675/14]
Amharc ar fhreagraThe most recent actuarial exercise conducted by the Comptroller and Auditor General showed the accrued liability in respect of public service occupational pensions to have been an estimated €116 billion as of December 2009. Work is under way in my Department on updating this figure; this exercise will estimate the position as of December 2012, and will take into account the relevant changes in public service pay and pensions over recent years. It is expected that the updated estimate of the accrued liability will be available early this year. The updated liability figure arising from this exercise will be an important consideration in the ongoing development of public service pension policy. Notwithstanding that the revised total liability figure is awaited, I am satisfied that adequate planning and provision is being made for the future payment of public service pensions, though this is naturally a matter which is kept under close review. My view is based on a series of cost containment measures put in place over recent years affecting existing pensioners, serving staff and new recruits.
The most significant cost-saving reform has been the introduction in January 2013 of the Single Public Service Pension Scheme , also known as the Single Scheme, which is the default pension scheme for new-hire workers across the entire public service. This landmark reform targets very substantial long-run savings of about one third of pension outgoing, with those savings deriving mainly from career-average (not final-salary) pension accrual, inflation (not pay) linkage of benefits, and higher minimum pension age (effectively 68 years for most new joiners).
Several other measures have also been taken over recent years which help to curb public service pension costs as follows:
- In 2004 minimum pension age for new-joiner public service workers was raised from 60 to 65 years.
- In 2010 public service pay cuts averaging approximately 7% were applied. Further pay cuts affecting public servants with annual earnings above €65,000 were applied in July 2013. These various pay reductions act to reduce individual pension and lump sum awards to persons retiring from the public service.
- In 2011 public service pensions in payment above €12,000 were reduced via a multi-band progressively structured Public Service Pension Reduction (PSPR), which had an average impact of 4% on pensions.
- In July 2013, further cuts in public service pension payment rates, via adjustments to the rates and scope of the PSPR, and amounting to between 2% and 5%, were imposed on pensions in excess of €32,500. This adjustment brings the full-year saving from PSPR to a projected €125 million.
